The NPV and IRR derived from estimated cash flows for a capital budgeting project are:
A)essentially expected values or means.
B)likely to differ from the actual results of the project.
C)random variables with their own probability distributions.
D)All of the above

Question

Quizplus · Accepted Answer

The NPV and IRR are essentially expected values or means of the estimated cash flows for a capital budgeting project. However, they are likely to differ from the actual results of the project due to various uncertainties and risks involved. Therefore, they can be considered random variables with their own probability distributions. Thus, all the choices are correct.

The NPV and IRR Derived from Estimated Cash Flows for a Capital